3 Secrets of Century-old Small Businesses

Not many companies last 100 years. But a brick company, a leather goods maker and a cheesemonger share tips on how to survive disruption while maintaining a sustainable small business.

Harvard Business School's Clayton Christensen introduced the term "low-end disruption" to the business lexicon a few decades ago. He observed that innovative technologies often emerge at the low end of a market after established suppliers have fallen in love with their existing products. For instance, "cheap" office photocopiers, desktop computers, and wireless phones created the initial demand for technologies that we now deem essential for everyday work.

Evolve Product Lineups to Support Strong Brands

Christensen warns that established companies often develop a kind of myopia that leaves them blind to opportunities beyond their existing service offering. Although the same family has run Ironrock Capital for five generations, each of the firm's leaders has guided the firm through changes that redefined their core product offerings.

In an interview with Thunderbird School of Global Management's Ernesto Poza, current CEO Guy Renkert explained that Ironrock Capital abandoned its original line of paving bricks to keep up with evolving market demands. Today, the company makes quarry, decorative tile, and structural bricks that support modern construction and design methods.

Create Strong Customers to Drive Demand

Bagmaker J.W. Hulme spent most of the past century manufacturing luggage and handbags sold under other companies' brands. By 2003, most of their clients pulled their contracts in favor of less expensive operations based in China. A new owner and CEO, faced with the prospect of laying off staff and shutting down operations, gambled on reconnecting consumers with the company's hundred-year heritage of American craftsmanship.

Today, the company has rebounded under its own brand, selling luxury leather goods on its website and through a network of high-end retailers. Building relationships with customers not only created demand for J.W. Hulme's products, an expansion into technology accessories let customers express their loyalty through repeat purchases. Its sponsorship of a regional manufacturing coalition helps boost demand for American-made clothing and accessories.

Adopt Disruptive Technologies to Capture New Markets

British cheesemongers Paxton & Whitfield can trace its heritage to a London market stall in 1742. Like other specialty food sellers, the company watched business erode after World War II as consumers started shopping in supermarkets for factory-produced groceries.

As a new owner took over the business in time for its bicentennial celebration, Paxton & Whitfield embraced ecommerce and used overnight courier services to ship its handmade cheese direct to eager customers throughout the UK. Beating competitors to the online market helped Paxton & Whitfield lock in loyalty from customers in towns without access to their bricks-and-mortar storefronts.

Businesses like these hit the century mark by embracing innovation, disruption, and evolution while honoring the spirit of their brands and founders. Even when you're stressed by planning for your company's next quarter, these three principles can help you build the kind of small business that can thrive for decades.

Joe Taylor Jr. has covered personal finance and business for more than two decades. His work has been featured on NPR, CNBC, Financial Times Television, Fox Business, and ABC News. He recently completed a personal finance book entitled The Rogue Guide to Credit Cards; (Rogue Guide Books, 2012).

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